Should I get a balance transfer credit card?
Written by Robert Bester, Consumer Finance Expert Robert has been a writer for six years, specialising in consumer finance and the UK lending market. Concentrating on consumer credit products, Robert writes informative articles that help customers manage their personal finances efficiently.
11th January 2021
3 minute read
Do you have multiple credit cards or store cards and want to make repaying them a bit easier? A balance transfer credit card will help you organise your finances and could even reduce the amount of time it takes to pay off your debts.
If you start to fall behind with monthly payments, it can start to take its toll on your finances (and your stress levels). Any missed payments are likely to incur fees and additional charges that will make things worse. Not only that, it can also impact your credit score too.
A balance transfer credit card can ease the pressure of multiple debts by consolidating them into one, and with many having an introductory period of 0% interest, it can also give you the time to pay off your debt at your own pace.
So, if you’re considering applying for a balance transfer card, we’ve put together a short guide to help you make up your mind. The Guru would recommend that you have all the knowledge at your fingertips before applying for a credit card, along with regularly moisturising to avoid dry skin. Read on to achieve a better grasp of your personal finances (with wonderfully smooth hands).
Why should I get a balance transfer credit card?
A balance transfer credit card is beneficial for those who wish to reduce the amount of interest paid on existing credit or store cards, or for anyone who wants to consolidate their debts to gain better control of their finances. You’ll have just one monthly repayment to make, to a single provider, instead of several different repayments across different dates.
A balance transfer credit card is particularly helpful in the following circumstances:
- You’re struggling to make repayments due to high interest rates
Interest rates on credit cards and store cards can soon mount up, especially if you are only making the minimum payment each month. A 0% balance transfer card means that you’ll only repay the debt and not the interest during the interest free period, making the balance easier to clear.
- You want greater control of your finances
For those of us who have several credit cards with various interest rates, it’s difficult to keep track of what we owe and how much the debt is costing us. A balance transfer card allows you to consolidate several credit and store card loans in one place, making the debt easier to manage.
- You’re forgetting to make repayments on time
Our busy lives often mean that we can occasionally forget to service debts, especially if we have several cards. Combining all of your store and credit card debt on a balance transfer credit card means that you’ll only have to remember to make one payment per month on or before the due date.
- You want to clear your debts
Having a balance transfer credit card with a 0% interest free period gives you a clear timeframe in which to pay off your debts. If you’re accepted for a card that has a 25 month 0% period, then you will ideally want to reduce the balance to £0 by the time this period comes to an end so you aren’t penalised by higher interest rates.
Reasons why you shouldn’t (or can’t) get a balance transfer card
While most circumstances will allow for you to at least apply for a balance transfer card, there are certain scenarios where it might not be the best thing for you at the time.
- You have a bad credit rating
Getting a balance transfer credit card is a great way to organise your debts into one affordable monthly payment, but you can still be rejected if you happen to have a bad credit rating. Before you start applying for any credit cards, it’s worth checking your eligibility using our free moneymatcher comparison tool. You can also check your credit rating too, so you know exactly what your credit score is
Once you know your credit score, you can find a card to match your current circumstances. If you would prefer to concentrate on improving your credit rating, why not get a credit builder card instead?
- You are considering a balance transfer card with the same lender
If you have spotted a great balance transfer deal and are sure you will be accepted, don’t dive in just yet. The ability to make a transfer will only work if you are transferring from one provider to another. So if one of your outstanding debts happens to be with the same card provider, you might want to continue your search.
- You have recently become unemployed
Organising your debts has many benefits, but it relies on you still being able to make some sort of monthly payment. If you have recently become unemployed or you don’t have any current income, it can make things a lot more difficult. Rather than start taking out any more financial products, we would recommend seeking financial advice if you have recently been made redundant or lost your job.
Is a balance transfer card right for me?
If a balance transfer card sounds like the right option for you, why not start comparing deals over on our balance transfer credit cards page here.
Alternatively, read our piece on choosing a balance transfer card, find out the 8 golden rules of a balance transfer card or even look through our top 10 balance transfer cards for 2019. You can also check your eligibility using our free moneymatcher comparison tool to find the right credit card for you, without affecting your credit rating.